Since 1963, there have been laws requiring pay equity yet pay equity has not been accomplished as it relates to equal pay for equal work regardless of gender or race. Nonprofit organizations are well known for paying less using the excuse they can’t compete with the private sector. This is simply not true. In fact, the number one reason why people leave nonprofits is poor compensation (salary and benefits). All nonprofit organizations should have a compensation policy that promotes not only pay equity, but ensure senior management compensation is equitable versus a compensation that is double or triple that of other positions. Here are some policy areas to consider:
A strong compensation strategy will include detailed research on comparable pay as it relates to your local market, the size of your organization, and the education and experience in each candidate. Companies like payscale.com pay for reliable research to determine comparable pay in your local market. It is recommended that the nonprofit pay in the 50th percentile of comparable salaries to be competitive. Remove, “we can’t afford it” as a barrier because the organization will spend more money replacing positions than hiring a person at a comparable salary.
Benefits must also be part of the compensation policy. Be creative and combine forces with other organizations and sources to provide the most comprehensive benefit package to compete with any organization in the local market. This can be accomplished with donors, realizing lower expenses with healthier employees, and lower expenses for replacing positions because the benefits offered do not a support work-life balance.
The compensation policy should also include a step process for salary increases, benefit increases, and promotions. This policy will not only help recruit great talent, but retain talent and build seniority based on knowing how to increase compensation over time.
In order to accomplish complete pay equity, a nonprofit organization should adapt policies to address labor challenges. These challenges can include current market trends, detailed research on the competition (nonprofit and for profit) regionally and nationally, and how funding will be secured to address current and future compensation requirements.
It is also helpful to list current pay inequalities and how the organization will address those inequalities today and in the future. For example, research suggests that women can be overlooked for promotions due to lack of financial acumen. This can be addressed by establishing a training certification program to provide improved financial acumen to anyone who has a desire to grow within the organization. Pay equity is clearly a labor challenge that has not been solved. Under the “public good” purpose of each nonprofit, clear, transparent pay equity strategies should be addressed by defining the problem and providing the solution over time.
Some nonprofit managers cringe every time the term “work-life balance” surfaces. Some managers see this as an opportunity for employees to be lazy and spend more time with their cat. The truth is “work-life balance” has been in place for over 10 years. Employers did not realize this issue because millennials simply left their job over “work-life balance” issues and did not tell anyone.
Today, work-life balance is not a generational aspiration. All employees need to accomplish a balance in their lives. Creating remote opportunities or flexible schedules is not giving up productivity or quality. It is simply addressing a significant trend in employment management. The organization should train managers on various strategies to engage their employees and teach them how to accomplish work-life balance. This issue will be a main factor in retention and recruiting. The better the organization addresses this issue and implements clear strategies and policies to help employees achieve this balance, the better the organization.
According to LinkedIn, prior to the pandemic 1 in 24 jobs were remote. Today, 1 in 7 jobs are remote. Managers can struggle engaging or coaching remote employees. Many strategies and best practices are in place to positively engage remote employees and teach how to be productive in an “non-office” environment. Just because you cannot see them several times throughout the day does not mean a loss in influencing their performance. Engage with professionals and training that addresses remote work and the organization will see an increase in productivity and quality.
Pay equity should be a part of any successful organization. While talking about the labor issues that surround pay equity is important, it is as important to implement active solutions to achieve 100% pay equity. While these three suggestions are just the start of improving pay equity in a nonprofit organization, it is a best practice to engage experts to assist in drafting and implementing policies that will last the test of time and provide the employees and the local community increased trust in the organization as a result of accomplishing pay equity.
Brad Lebowsky, CEO
Nonprofit Engagement Advisors, NEA, LLC
Connecting people, communities, and resources to grow exempt organizations.